Living a More Purposeful Life One Cent at a Time

E-Funds & Anchors: The Cheapest $600 Ever Spent

This week, we paid off Mr. P’s car loan. Approximately 56 minutes after clicking “submit” on the payment, our furnace started squawking. I had a morning appointment to keep, but Mr. P promised to stand at the ready in the basement. I’m not entirely sure what that entailed, but I like to imagine him with a fire extinguisher and the HVAC guy on speed dial.

When I returned home an hour later, I was assaulted with the smell of burnt toast. Since Mr. P isn’t much of a breakfast eater, I could only assume things went from noisy to worse. Sure enough, there was nary a squawk or a squeak to be heard. Silence filled the house. Mr. P had turned off the furnace and put in a call for the repairman.

Bidding Adieu to Our Emergency Fund

Like any slightly neurotic personal finance blogger, my first instinct was to log into our savings account and stare longingly at our emergency fund: $10,000* and a some odd dollars and cents in interest. I know a lot of people put a lot of thought into emergency funds. I can’t say that we’re exactly those people. There wasn’t a whole lot of science to how we arrived at $10,000. It’s roughly three months of my take-home pay. It’s roughly ten months of our mortgage. It’s enough to get by for a while. More than any of that, though, seeing that 10 in front of the comma offers me a real sense of security. And as the temperature quickly dipped in our house, I was convinced that security was about to be shattered.

The Power of an Anchor

After bidding a fond farewell to our emergency fund’s quintuple** digit status, I opened a new tab and got to Googling. I already had $5,000 in my mind as a ballpark estimate for the cost of a new furnace, but I wasn’t really sure where that came from. Did I learn that we when replaced our AC unit two summers ago? Is that something my mom told me? Had a random fact from long-gone consumer education course suddenly bubbled up in my brain? Realistically, I probably saw it on social media somewhere. Thanks to wonderfully reputable and entirely nonspecific sources like Angie’s List, I learned that new furnaces could cost anywhere between $2,500 and $14,000. I would be lying if I didn’t say that at that point I was briefly contemplating selling our house and finding a rental somewhere.

I had another appointment, so I left Mr. P with the checkbook and a space heater. As soon as my appointment ended, I punched in the numbers to his phone. A chorus of “Please let this be under $5,000, please let this be under $5,000” pulsed through my mind. Because my frantic thoughts control not only my fate but that of the entire heating, ventilating, and air conditioning universe. I am that good.

“Take a deep breath,” he answered, effectively stopping my heart. While Mr. P tried to tell me that it was $500 to purchase and install a new motor, my brain had latched so firmly onto $5,000 that I thought he misspoke. After assuring me that he did know what he was talking about, he let me know that a new wheel would also have to be installed once that part came in. Altogether, we’d end up spending about $600.

In a few short hours, I went from feeling like the most misfortunate of Midwestern souls for losing a furnace on a subzero day to the luckiest. That’s the power of anchors. $600 is a lot of money. Paying for that repair is going to pull our emergency fund total below my beloved $10,000 mark. Regardless, I’m going to ride this high for a while. I may not have won–or even played–the billion-dollar Powerball, but I certainly feel a lot richer.

*We do have additional savings earmarked for future expenses punishments for owning a home like siding and a roof.

We had something similar happen to us this summer (and NC summers can be brutal). Our HVAC system went down completely. We were looking at a few hundred just to get someone to come look at it (much less to fix it), but fortunately Jon can work on a lot of things. He was able to figure out the likely culprit, find the part on Amazon for about $50 and replace it himself.

He was also able to fix the porch roof on one of our rentals for a few hundred bucks in materials when the property management company found a contractor to fix it for us for $3600, and to salvage a couple of clothes dryers for $30 parts.

Ah, goodness – anchoring. So powerful! I cannot say any home expenses/repairs have hit us yet (still renting!), but it almost seems as if even saving for a down payment – I want to ensure our emergency savings is a full year’s worth as well to prepare for such repairs once we purchase a home. When situations like this do occur, it’s almost more beneficial to shoot high then feel that rush of relief when it’s incredibly lower than anticipated.

Ah, goodness – anchoring. So powerful! I cannot say any home expenses/repairs have hit us yet (still renting!), but it almost seems as if even saving for a down payment – I want to ensure our emergency savings is a full year’s worth as well to prepare for such repairs once we purchase a home. When situations like this do occur, it’s almost more beneficial to shoot high then feel that rush of relief when it’s incredibly lower than anticipated.

I can’t even tell you how to begin to save for home emergencies. We have a home emergency fund (ie: furnace situation) and then we have other money set aside for inevitabilities. It turns my stomach to think about having to replace the roof and siding eventually, but I know it’s coming. Save, save, save, and save some more. You’re right on about shooting high!

I LOVE It when things end up beating out the anchors! Like when we thought we could only get back $7000 from our energy audit program and then she said we could get back up to $8500… all in all, we’re getting $7700 and that extra 700 seems like so much more money than the initial $7000 we had already counted on!

It’s such a relief when things come in under your panicked brain’s budget. The latch on our sliding glass door broke. Right as we were celebrating my bonus letting us hit our goal amount.

I foresaw thousands going into a replacement door and having to post on the blog again saying, “Oh, never mind. We’re not there yet. I’m off to sob in a corner”

Instead, they were able to replace the latch. It was $110 including the purchase of a new latch, and only because the company we called had a minimum labor requirement. (Later I kicked myself for not having him work on a couple of other small jobs we had, but oh well.)

Going from $3k to $110 was the kind of relief that’s hard to explain to normal people who don’t immediately go to the worst-case scenario.

Two years ago, we had an unexpected home repair when our not-that-old water heater started leaking all over the place. To make matters worse, I was in the hospital at the time so my wife was dealing with it on her own. Unfortunately, she didn’t have any anchoring, and under the stress of my medical issues and a sopping wet floor on a Sunday morning, my usually frugal wife didn’t do a lot of questioning on the price of a new one. It was way more than it should have cost, so when I got home I called the contractor and gave them heck and they actually did issue us a small refund. I’m glad you had a very different experience, and that your furnace was repairable!

Hey, Penny. Parting with $600 isn’t fun, but it could have been much worse (as you’re well aware). When I first moved down to North Carolina, Mrs. Groovy and I bought a rental property. During one fall service, our HVAC guy discovered a number of hairline cracks in the furnace’s heat exchanger. Replacing that part cost us $1,200. Then a couple of years after that, the whole HVAC system gave up the ghost. Goodbye $3,800. Then a few years after that, the man of the household, the sole breadwinner, got arrested for DWI. And because he had immigration issues, he was sent to an ICE facility in Atlanta, Georgia. Needless to say, Mrs. Groovy weren’t going to kick his wife and his three small children into the street. So goodbye to four months of rent. But because we always had an emergency fund, not one of these hiccups became a crisis. Having an emergency fund is a godsend.

Isn’t it awesome when you can get something fixed *instead of* replaced?? That’s happily happened here more often lately now that hubby has learned the power of YouTube it. 🙂

I hate it when you have an emergency fund set up and then have to spoil it with emergencies. I’m totally with you, I wouldn’t be happy about touching it! But great that it was there when you needed it.

Anchoring used to be a coping mechanism but now that we’re past the point where small emergencies will empty the fund, I do a weird “Ok, as long as it leaves us $XX,XXX, then I won’t panic” and the X digits all have to be even. It’s not even logical, it’s just what makes me feel better when we still need more data.

I feel you on the $10,000 emergency fund number. I’m not 100% sure how I got to that number myself, other than it was roughly 3 months of expenses when I was living on my own in NYC, but mostly because that number just makes me feel safe too.

The HVAC guy just left my house about 2 hours ago, his second trip to see us this week. We have a system that is so old that most of the HVAC guys say “Whoa!” when they see it. It’s over 20 years old and the parts are now obsolete, so repairs are generic parts and bubble gum, as far as I can tell. Good thing York (the brand name) made this one to last.

This time cost us $500. And of course I just cancelled our annual home warranty a month ago to save money. We were paying $650/year plus $75/visit for about 1-2 calls per year. My wife freaked at the $500 price tag and gave me the “I told you so” speech.

We own a house that wasn’t upgraded by the previous owners. We are working on our debt and putting band-aids on repairs until we can do upgrades ourselves, including a new roof, new HVAC (two zones), kitchen, bathrooms, and floors. So much I want to do to this house. It hurts to watch HGTV sometimes, seeing all the nice people getting upgrades to their houses. But it also serves as motivation.

I bet paying just $600 was a huge relief! I’ve gotten to the point where I always assume the worst about home repairs. We had a $1,100+ furnace repair last year, our water heater burst, and we had to replace the furnace and air conditioner in one of our rentals.